Prelim: Intro to Econ

• a study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals

  economics
• it requires that an economy produce the highest combination of quantity and quality of goods and services given its technology and scarce resources

  economic efficiency
• Goals of Economic

  1. To strengthen economic freedom.
  2. Promote economic efficiency
  3. Promote economic stability
  4. To improve economic security
  5. Attaining a high level of growth in the economy
• Ultimate Goal of Economics

  to improve the living conditions of people in their everyday lives
• The Scientific Method of Economics

  1. Data Gathering
  2. Economic Analysis
  3. Economic Conclusion
• other this being equal of constant

  ceteris paribus
• what ought to be

  NORMATIVE ECONOMICS
• "what is"

  POSITIVE ECONOMICS
• Methodologies of Economics

  1. Normative
  2. Positive
• this methodology can all be resolved by reference to analysis and empirical evidence

  positive economics
• involves ethical precepts and norms of fairness. There are no right or wrong answers to these questions because they involve ethics or values rather than facts

  normative economics
• Branches of Economic

  • Microeconomics
  • Macroeconomics
• economic behavior of individual units

  microeconomics
• economic behavior of the whole economy or its aggregates

  macroeconomics
• a collection of specific economic units treated as if they were one unit

  aggregates
• Characteristics of Microeconomics

  1. Microeconomics looks at the decisions of individual units.
  2. Microeconomics looks at how prices are determined.
  3. Microeconomics is concerned with social welfare.
  4. Microeconomics has a limited focus
  5. Microeconomics develops skills
• Microeconomics is often called

  Price Theory
• Historical Backgorund

  Hunter-gatherer - farming society - professionals
• His main concern was to outline how one could live a moderate and virtuous life in harmony with the interest of society

  Aristotle
• Contributions of Plato

  1. Division of Labor
  2. Theory of Money
  3. Theory of Market
• Contributions of Aristotle

  1. Fairness in exchange
  2. Monopoly
  3. Use value and Exchange Value
• this explains that how much the good can fetch in return for other good

  exchange value
• it represents the good's intrinsic characteristics

  use value
• “what is rare is greater good than what is plentiful”

  “Thus gold is a better thing than iron, though less useful.”

  paradox of value
• ”household management”

  oikonomikos of oikonomos
• it explains that an efficient management translated into effective leadership.

  oikonomos
• Xenophon contributions


  Oikonomikos or Oikonomos
• Thomas Aquinas Contributions

  1. Lending and Interest
  2. The Just Price
  3. Distributive Justice
  4. Compensatory Justice
• Distributive Justice is also called

  fair distribution
• Compensatory Justice also called

  fair exchange
• John Stuart Mill Contributions

  1. A system of logic
  2. Utilitarianism
  3. Wages
• this explains that actions that lead to people's happiness are right and that those that lead to suffering are wrong

  utilitarianism
• fund theory

  wages
• ALFRED MARSHAL

  1. Principles of Economics Demand in terms of MU
• father of economics


  Adam Smith
• “The Wealth of Nations" also called

  Invisible Hand
• this encourage exports, restrict imports

  merchantilism
• this explains that (no taxes, regulations, or tariffs, market should be completely free to be led by the natural laws of supply and demand.)

  Laissez Faire
• this is the right to private property and equality before the law

  Liberalism
• this is the freedom of action for individuals over collective or state control

  individualism